Genie Energy Ltd. (NYSE: GNE, GNEPRA) reported a second quarter 2018 net loss of $0.09 per share on revenue of $56.4 million.

FINANCIAL AND OPERATIONAL HIGHLIGHTS

(Throughout this release, 2Q18 results are compared to 2Q17 results unless otherwise noted)

• Genie Retail Energy's (GRE) income from operations increased to $3.3 million compared to a loss from operations of $9.4 million. Adjusted EBITDA* increased to $3.8 million compared to negative Adjusted EBITDA of $8.9 million. GRE's results in the year ago quarter were impacted by a legal accrual of $9 million;
• Consolidated loss from operations was $2.3 million compared to $13.6 million. Consolidated Adjusted EBITDA increased to $1.8 million compared to negative Adjusted EBITDA of $11.9 million;
• Net loss per share decreased to $0.09 per basic and diluted share from $0.55;
• GRE's churn rate decreased to 5.7% from 6.3%;
• Genie Energy reclassified its drilling assets as 'held for sale' reflecting management's decision to explore strategic options for its Atid drilling services start-up. The reclassification resulted in an impairment charge of $2.3 million;
• Genie Energy's Board of Directors has declared a second quarter dividend of $0.075 per share.

COMMENTS OF MICHAEL STEIN, CEO OF GENIE ENERGY

"Genie Energy's results for the three months ended June 30 were solid and consistent with our expectations. We continue to focus on Genie Retail Energy's operations, and achieved encouraging improvements in revenue, gross profit and income from operations even with our continued investment in international expansion.

"Looking ahead, we are focused on continuing the expansion of Genie Retail Energy both domestically and overseas. Orbit Energy, our retail energy JV operating in Great Britain, is ramping up its customer acquisition programs. We also expect to begin acquiring customers in an additional international market later this year."

BALANCE SHEET HIGHLIGHTS

At June 30, 2018, Genie Energy had $124.4 million in total assets, including $44.4 million in cash, cash equivalents and restricted cash. Liabilities totaled $50.7 million and working capital (current assets less current liabilities) totaled $45.0 million.

DIVIDEND ON GENIE ENERGY COMMON STOCK

Genie Energy's Board of Directors has declared a 2Q18 dividend of $0.075 per share of Class A and Class B common stock with a record date of August 15, 2018. The dividend will be paid on or about August 24, 2018. The distribution will be treated as an ordinary dividend for income tax purposes.

Genie Retail Energy (GRE)

Genie Retail Energy's customer base as measured in residential customer equivalents (RCEs) decreased to 283,000 at June 30, 2018 from 289,000 a year earlier and 285,000 at March 31. Meters served decreased to 363,000 from 430,000 a year ago and from 373,000 at March 31. The year over year decreases reflect the regulatorily mandated relinquishment of certain low-income customers in New York served by retail energy providers (REPs) to the incumbent utilities as well as GRE's strategic decision to pull back customer acquisition efforts in certain territories to reduce regulatory risk.

Gross meter acquisitions during the quarter totaled 57,000 compared to 98,000 in the year ago quarter and 55,000 in the prior quarter. The year over year decrease resulted in part from a refocusing of customer acquisition programs to emphasize higher value customers while reducing regulatory risk in certain jurisdictions. This shift has led to a steady increase in average consumption per meter in recent quarters.

GRE's average monthly customer churn decreased to 5.7% from 7.6% in the first quarter and from 6.3% in the year ago quarter. The decreases primarily reflect lower rates of new customer acquisitions in recent periods – new customers exhibit higher churn rates than longer tenured customers - and the impact of customer retention programs, and, sequentially, the relinquishment of certain customers in New York State during the first quarter of 2018.

Meters enrolled in offerings with fixed rate characteristics constituted approximately 36% of GRE's total load during June 2018 – an increase from 29% in June 2017 - reflecting the growing popularity of fixed rate programs.

GRE generated all of Genie Energy's revenue and gross profit.

GRE's revenue increased to $56.4 million from $50.2 million reflecting higher commodity prices and the impact of the settlement of class-action lawsuits related to the 'polar vortex' of the winter of 2013-2014. In connection with those settlements, GRE reduced 2Q17 revenue by $3.6 million for estimated payments to customers.

Revenue from electricity sales increased to $48.5 million from $44.5 million reflecting the $3.1 millionreduction in revenue in 2Q17 for the legal settlements, and a 9.0% increase in revenue per kilowatt hour sold.

Natural gas sales increased to $7.4 million from $5.3 million primarily reflecting a 42.0% increase in revenue per therm sold and a 2Q17 revenue reduction of $0.5 million for the legal settlements.

GRE's gross margin percentage increased to 28.5% from 24.1% as revenue per unit of both electricity and gas sold increased more rapidly than their respective costs.

GRE's SG&A expense decreased to $12.1 million from $21.5 million as a result of the $5.4 million in expense incurred for the settlement of the class-action lawsuits in 2Q17 and the reduced level of customer acquisitions in the current quarter.

GRE's income from operations increased to $3.3 million compared to a loss from operations of $9.4 million. Adjusted EBITDA increased to $3.8 million from negative Adjusted EBITDA of $8.9 million. The improved results were driven by the legal settlements in the year ago quarter, the strengthened gross margins and the reduction in customer acquisition expense.

Afek and Atid

In November 2017, Genie Energy's Afek Oil and Gas subsidiary suspended drilling operations in Northern Israel based on preliminary analysis of results from its Ness 10 exploratory well. Subsequent analysis by an outside consultant indicates that a zone within the Ness 10 well contains evidence of hydrocarbons at levels sufficient to warrant additional testing. Accordingly, Afek requested and received a renewal of its exploratory license from the Ministry of Energy for the Northern portion of its former license area. Afek is in the process of securing the permits and other regulatory approvals needed to perform the testing.

During the second quarter, the management of Genie Energy determined to explore strategic options for its Atid drilling services start-up. Reflective of that decision, the company's drilling assets were reclassified as 'held for sale' resulting in an impairment charge of $2.3 million.

Following the quarter close, Genie reached a tentative agreement in principle to restructure Atid, its drilling services start-up. Under the terms of the tentative agreement, Genie Energy would retain a minority stake in Atid with the remainder owned by Chairman Howard Jonas and Atid's CEO. The arrangement would reduce Genie Energy's exposure to the costs of the venture while retaining access to Atid's expertise and services.

ABOUT GENIE ENERGY LTD.

Genie Energy Ltd. (NYSE: GNE, GNEPRA), through its Genie Retail Energy (GRE) division, provides electricity and natural gas primarily to residential and small business customers in the United Statesand, through a joint venture, in Great Britain. GRE also operates Diversegy, a commercial brokerage and marketing services company. For more information, visit www.genie.com.